What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-08-14 compared with 2026-05-15 · 81 added, 56 removed, 190 unchanged (42% of the section changed)

6 unchanged sentences

• Our ability to continue as a going concern

• Our ability to comply with financial covenants in our First Lien Credit Agreement and Second Lien Credit Agreement;

• Potential conflicts of interest with SG Broadcasting LLC (“SG Broadcasting”) and our status as a “controlled company”;

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We generally limit barter activity to items or services that we would otherwise purchase for cash and maintain a policy of not preempting paid advertising spots with barter advertising.

The following table summarizes the sources of our revenues for the three months ended March 31, 2026 and 2025.

The following table summarizes the sources of our revenues for the three and six months ended June 30, 2026 and 2025.

The category “Other” includes, among other items, revenues related to network revenues and barter.

(dollars in thousands) Three Months Ended March 31,

2026 % of Total 2025 % of Total

(dollars in thousands) Three Months Ended June 30, Six Months Ended June 30,

2026 % of Total 2025 % of Total 2026 % of Total 2025 % of Total

Net revenues:

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As part of the Estrella Acquisition integration, we developed a plan to close and relocate certain studio and marketing operations.

In fulfilling this plan, we incurred no involuntary termination costs in the three months ended March 31, 2026 and 2025, included in operating expenses on our condensed consolidated statements of operations included elsewhere in this report.

In fulfilling this plan, we incurred no involuntary termination costs in the three and six months ended June 30, 2026 and $0.2 million and $0.5 million for the three and six ended June 30, 2025 , respectively.

These costs are included in operating expenses on our condensed consolidated statements of operations included elsewhere in this report.

CRITICAL ACCOUNTING ESTIMATES

During the three months ended March 31, 2026, there were no material changes to our critical accounting policies and estimates from those described under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations-Critical Accounting Estimates” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, filed with the SEC on March 31, 2026.

During the six months ended June 30, 2026, there were no material changes to our critical accounting policies and estimates from those described under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations-Critical Accounting Estimates” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, filed with the SEC on March 31, 2026.

We have considered information available to us as of the date of issuance of these financial statements and are not aware of any specific e vents or circumstances that would require an update to our estimates or judgments, or a revision to the carrying value of our assets or liabilities.

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and its consolidated subsidiaries should be read in conjunction with our condensed consolidated financial statements and notes thereto included elsewhere herein.

The key developments in our business for the three months ended March 31, 2026 are summarized below:

• Net revenues of $31.4 million increased $3.4 million, or 12%, during the three months ended March 31, 2026 compared to net revenues of $28.0 million during the three months ended March 31, 2025.

• Operating loss of $7.5 million increased $2.8 million, or 61%, during the three months ended March 31, 2026 compared to operating loss of $4.7 million during the three months ended March 31, 2025.

• Net loss of $9.4 million increased $0.8 million, or 9%, during the three months ended March 31, 2026 compared to net loss of $8.6 million during the three months ended March 31, 2025.

• Cash flows used in operating activities of $2.0 million, represent a decrease of $4.1 million, or 199%, during the three months ended March 31, 2026 compared to cash flows provided by operating activities of $2.1 million during the three months ended March 31, 2025.

• Adjusted EBITDA for the three months ended March 31, 2026 was $0.2 million decreasing 86% compared to Adjusted EBITDA of $1.4 million for the three months ended March 31, 2025.

The key developments in our business for the three months ended June 30, 2026 are summarized below:

• Net revenues of $34.0 million increased $2.7 million, or 9%, during the three months ended June 30, 2026 compared to net revenues of $31.2 million during the three months ended June 30, 2025.

• Operating loss of $4.9 million decreased $1.9 million, or 28%, during the three months ended June 30, 2026 compared to operating loss of $6.8 million during the three months ended June 30, 2025.

• Net loss of $8.6 million increased $1.2 million, or 17%, during the three months ended June 30, 2026 compared to net loss of $7.4 million during the three months ended June 30, 2025.

• Adjusted EBITDA for the three months ended June 30, 2026 was $0.9 million decreasing 38% compared to Adjusted EBITDA of $1.5 million for the three months ended June 30, 2025.

The key developments in our business for the six months ended June 30, 2026 are summarized below:

• Net revenues of $65.4 million increased $6.1 million, or 10%, during the six months ended June 30, 2026 compared to net revenues of $59.3 million during the six months ended June 30, 2025.

• Operating loss of $12.4 million increased $1.0 million, or 8%, during the six months ended June 30, 2026 compared to operating loss of $11.5 million during the six months ended June 30, 2025.

• Net loss of $18.0 million increased $2.0 million, or 12%, during the six months ended June 30, 2026 compared to net loss of $16.0 million during the six months ended June 30, 2025.

• Cash flows used in operating activities of $2.8 million, represent a decrease of $1.9 million, or 210%, during the six months ended June 30, 2026 compared to cash flows used in operating activities of $0.9 million during the six months ended June 30, 2025.

• Adjusted EBITDA for the six months ended June 30, 2026 was $1.1 million decreasing 61% compared to Adjusted EBITDA of $2.9 million for the six months ended June 30, 2025.

Consolidated Operating Data

The following table sets forth a summary of each of the Company’s components of operating expense as a percentage of net revenue for the three months ended March 31, 2026 and 2025:

Three Months Ended March 31,

(Dollars in thousands) Amount % Amount %

The following table sets forth a summary of each of the Company’s components of operating expense as a percentage of net revenue for the three and six months ended June 30, 2026 and 2025:

Three Months Ended June 30, Six Months Ended June 30,

2026 2025 2026 2025

(Dollars in thousands) Amount % Amount % Amount % Amount %

NET REVENUES $ 33,969 100 $ 31,245 100 $ 65,355 100 $ 59,275 100

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OPERATING LOSS $ (4,889) $ (6,785) $ (12,419) $ (11,468)

Three-Month Periods Ended March 31, 2026 compared to March 31, 2025

Three Months Ended March 31, Change

Three-Month and Six-Month Periods Ended June 30, 2026 compared to June 30, 2025

Three Months Ended June 30, Change Six Months Ended June 30, Change

(Dollars in thousands) 2026 2025 $ % 2026 2025 $ %

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Interest expense, net (4,029) (3,855) (174) 5 (7,969) (7,609) (360) 5

Change in fair value of warrant shares liability — 1,410 (1,410) N/A — 1,410 (1,410) N/A

Other income, net 543 2,119 (1,576) (74) 4,222 2,230 1,992 89

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LOSS BEFORE EQUITY METHOD INVESTMENTS (8,225) (7,390) (835) 11 (17,338) (15,996) (1,342) 8

EQUITY LOSS IN INVESTMENTS (255) — (255) N/A

EQUITY LOSS IN INVESTMENTS (388) — (388) N/A (643) — (643) N/A

NET LOSS $ (8,613) $ (7,390) (1,223) 17 $ (17,981) $ (15,996) (1,985) 12

Net revenues:

Net revenues increased during the three months ended March 31, 2026 primarily due to increased digital revenue, partially offset by a decrease in spot revenue as the Company increased its focus on digital offerings.

Net revenues increased during the three and six months ended June 30, 2026 primarily due to increased digital revenue, partially offset by a decrease in spot revenue as the Company increased its focus on digital offerings.

Operating expenses:

Operating expenses increased during the three months ended March 31, 2026 primarily due to higher digital platform costs, which rose in line with growth in digital revenue.

Operating expenses increased during the three and six months ended June 30, 2026 primarily due to higher digital platform costs, which rose in line with growth in digital revenue.

These increases were partially offset by reductions in repairs and maintenance, utilities and rent.

Corporate expenses:

Corporate expenses increased for the three months ended March 31, 2026 primarily due to an increase in employee related costs, and corporate insurance charges.

Corporate expenses increased for the three and six months ended June 30, 2026 primarily due to an increase in employee related costs, and corporate insurance charges.

Depreciation and amortization:

Depreciation and amortization expense decreased during the three months ended March 31, 2026 as certain assets became fully depreciated in the prior year, partially offset by new assets placed into service.

Depreciation and amortization expense decreased during the three and six months ended June 30, 2026 as certain assets became fully depreciated in the prior year, partially offset by new assets placed into service.

Loss on disposal of assets:

Loss on disposal of assets increased for the three months ended March 31, 2026 primarily due to the disposal of certain fixed assets due to the amendment for an existing lease agreement, while there were no such disposals in 2025.

Loss on disposal of assets increased for the three and six months ended June 30, 2026 primarily due to the disposal of certain fixed assets due to the amendment for an existing lease agreement, while there were no such disposals in 2025.

Operating loss:

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Interest expense, net:

Interest expense increased during the three months ended March 31, 2026 primarily due to higher outstanding debt balances, due to PIK and accretion on loans, partially offset by lower interest rates.

Equity loss in investments:

Equity loss in investments increased during the three months ended March 31, 2026 due to the investment in unconsolidated affiliates as of January 1, 2026.

Other income:

Other income increased during the three months ended March 31, 2026 compared to the prior year primarily driven by a gain on a lease modification, interest and penalty income related to an equity clawback, income from managed services agreements under which the Company began providing accounting and other services on April 17, 2025, and sublease income from one of the Company’s facilities that commenced in the first quarter of 2025.

Interest expense increased during the three and six months ended June 30, 2026 primarily due to higher outstanding debt balances, due to PIK and accretion on loans, partially offset by lower interest rates.

Change in fair value of warrant shares liability:

Warrant shares liability decreased during the three and six months ended June 30, 2026, as the warrants were no longer outstanding and, therefore, no mark-to-market accounting was required.

Other income, net:

Other income decreased during the three months ended June 30, 2026 compared with the three months ended June 30, 2025, primarily due to the absence of a one-time employee retention tax credit received in the prior-year period.

These unfavorable variances were partially offset by increased revenue recognized under the Company's managed services agreement.

As a result, other income declined from the prior-year period, reflecting the nonrecurring nature of the employee retention tax credit.

Other income increased during the six months ended June 30, 2026 compared to the prior year primarily driven by a gain on a lease modification, interest and penalty income related to an equity clawback, income from managed services agreements under which the Company began providing accounting and other services on April 17, 2025, and sublease income from one of the Company’s facilities that commenced in the first quarter of 2025 and was partially offset by the non-cash mark-to-market gain and the one-time employee retention tax credit received in the prior year.

Provision for income taxes:

Provision for income taxes decreased during the three months ended March 31, 2026 compared to the prior year due to changes in the deferred tax liability and additional interest and penalties accrued.

Consolidated net (loss) income:

Provision for income taxes decreased during the three months ended June 30, 2026 compared to the prior year due to changes in the deferred tax liability and an adjustment for interest and penalties accrued.

Provision for income taxes increased during the six months ended June 30, 2026 compared to the prior year due to changes in the deferred tax liability and an increase in interest and penalties accrued.

Equity loss in investments:

Equity loss in investments increased during the three and six months ended June 30, 2026 due to the investment in unconsolidated affiliates as of January 1, 2026.

Consolidated net loss:

The increase in consolidated net loss was primarily due to the increase in digital platform costs partially offset by the increase in digital revenue.

See “Net revenues,” “Operating expenses,”, “Corporate expenses,” “Depreciation and amortization,” “Loss on disposal of assets,” “Interest expense, net,” “Equity loss in investments,” “Other income” and “ Provision for income taxes,” above for additional details.

See “Net revenues,” “Operating expenses,”, “Corporate expenses,” “Depreciation and amortization,” “Loss on disposal of assets,” “Interest expense, net,” “Other income, net,” “ Provision for income taxes,” and “Equity loss in investments” above for additional details.

Performance by Business Segment

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The Company’s Audio Segment includes the Estrella MediaCo radio, digital and events operations as well as two New York radio stations that predate the Estrella Acquisition.

Revenue, Operating expenses and Segment Operating (Loss) Income for our Audio Segment were as follows:

Revenue, Operating expenses and Segment Operating Loss for our Audio Segment were as follows:

Audio Segment

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(Dollars in thousands) 2026 2025 2026 2025

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14,432 16,785 28,979 29,782

Segment Operating (Loss) Income $ (4,784) $ 695

Segment Operating Loss $ (2,841) $ (1,549) $ (7,625) $ (854)

(1) Operating expenses comprise several line items, including operating costs, depreciation and amortization, and other segment-specific items, as detailed in the Segment Information disclosures in Note 13.

Revenue from our Audio Segment decreased $3.9 million and operating expenses increased $1.5 million, respectively, during the three months ended March 31, 2026 compared to the same period in 2025, driven primarily as a result of the decrease in spot revenue and increases in operating expenses such as loss on disposal of assets and other departmental costs.

Revenue from our Audio Segment decreased $3.6 million and operating expenses decreased $2.4 million, respectively, during the three months ended June 30, 2026 compared to the same period in 2025, driven primarily as a result of the decrease in spot and other revenue and decreases in operating expenses such as professional fees, bad debt fees and advertising and promotion costs.

Revenue from our Audio Segment decreased $7.6 million and operating expenses decreased $0.8 million, respectively, during the six months ended June 30, 2026 compared to the same period in 2025, driven primarily as a result of the decrease in spot and other revenue and decreases in operating expenses such as professional services fees.

Video Segment

The Company’s Video Segment includes the results of the EstrellaTV network and all of the Estrella MediaCo television operations, including digital.

Revenue, Operating expenses and Segment Operating Loss for our Video Segment were as follows:

Revenue, Operating expenses and Segment Operating Income (Loss) for our Video Segment were as follows:

Video Segment

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(Dollars in thousands) 2026 2025 2026 2025

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22,371 19,691 45,074 37,814

Segment Operating Loss $ (1,080) $ (3,785)

Segment Operating Income (Loss) $ 7 $ (3,682) $ (1,073) $ (7,467)

Revenue and operating expenses from our Video Segment increased $7.3 million and $4.6 million, respectively, during the three months ended March 31, 2026 compared to the same period in 2025.

These increases were primarily in digital revenue and increases in impression expense, partially offset by decreases in employee related expenses.

Revenue and operating expenses from our Video Segment increased $6.4 million and $2.7 million, respectively, during the three months ended June 30, 2026 compared to the same period in 2025.

These increases were primarily in digital revenue and increases in impression, distribution and production costs.

Revenue and operating expenses from our Video Segment increased $13.7 million and $7.3 million, respectively, during the six months ended June 30, 2026 compared to the same period in 2025.

These increases were primarily in digital revenue and increases in impression, distribution and production costs.

Corporate and other

Operating expenses related to Corporate and other increased to $1.7 million for the three months ended March 31, 2026 compared to $1.6 million for the three months ended March 31, 2025, primarily due to an increase in employee related costs, and corporate insurance charges.

Operating expenses related to Corporate and other increased to $2.1 million for the three months ended June 30, 2026 compared to $1.6 million for the three months ended June 30, 2025, primarily due to an increase in employee related costs, and corporate insurance charges.

Operating expenses related to Corporate and other increased to $3.7 million for the six months ended June 30, 2026 compared to $3.1 million for the six months ended June 30, 2025, primarily due to an increase in employee related costs, and corporate insurance charges.

Non-GAAP Financial Measures

Reconciliations of Net Loss to Adjusted EBITDA (1)

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(Dollars in thousands) 2026 2025 2026 2025

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Loss on disposal of assets 233 5 985 144

Other income (3,679) (111)

Change in fair value of warrant shares liability — (1,410) — (1,410)

Other income, net (543) (2,119) (4,222) (2,230)

Acquisition, integration and synergy services 2,104 4,731 4,381 7,590

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Other non-cash adjustments (1)

1,171 17 1,374 55

Adjusted EBITDA (2)

$ 942 $ 1,512 $ 1,145 $ 2,918

(1) Other non-cash adjustments include compensation adjustments, non-cash rent charges and other non-cash expenses.

(1) Other non-cash adjustments include stock compensation adjustments, non-cash rent charges and other non-cash expenses.

(2) We define Adjusted EBITDA as consolidated net loss adjusted to exclude restructuring expenses, business combination transaction costs, unusual and non-recurring expenditures, non-cash items and non-cash compensation included within operating expenses, as well as the following line items presented in our Statements of Operations:

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Our primary uses of capital have been, and are expected to continue to be, capital expenditures, working capital requirements, and strategic acquisitions.

As of March 31, 2026, the Company’s liquidity position is constrained by its working capital deficit and upcoming debt maturities.

As of June 30, 2026, the Company’s liquidity position is constrained by its working capital deficit and upcoming debt maturities.

As a result of the Company’s failure to satisfy the Audio Adjusted EBITDA covenant under its First Lien Credit Agreement and Second Lien Credit Agreement for the quarter ended June 30, 2026, $63.3 million of outstanding long-term debt was classified as current as of June 30, 2026, further increasing the Company’s working capital deficit and near-term liquidity requirements.

While management is actively implementing plans to improve liquidity, including enhancing operating performance, managing working capital, and pursuing refinancing and additional capital, there can be no assurance that these efforts will be successful.

At March 31, 2026, the Company had cash, cash equivalents and restricted cash of $5.1 million and negative working capital of $54.5 million.

At June 30, 2026, the Company had cash, cash equivalents and restricted cash of $3.8 million and negative working capital of $122.0 million.

The Company’s current debt classification includes $63.3 million of debt that was classified as current as a result of the Company’s failure to satisfy the Audio Adjusted EBITDA covenant under its First Lien Credit Agreement and Second Lien Credit Agreement as of June 30, 2026.

At December 31, 2025, the Company had cash, cash equivalents and restricted cash of $7.1 million and negative working capital of $49.0 million.

The increase in negative working capital was driven by the cancellation of certain programming rights contracts reducing the current portion of programming rights as well as increased accounts payable.

The increase in negative working capital was driven by the increase in accounts payable and the classification of certain long-term debt as current.

Additionally, in August 2026, the Company entered into a second amendment to the First Lien Credit Agreement that extended the maturity dates of the $10.0 million in Delayed Draw Term Loans from July 30, 2026 to October 31, 2026.

On August 14, 2026, the Company also received a waiver from WhiteHawk Capital Partners, LP, and HPS, as administrative and collateral agents, and the lenders party thereto, with respect to the Company’s failure to satisfy the Audio Adjusted EBITDA covenant under its First Lien Credit Agreement and Second Lien Credit Agreement for the quarter ended June 30, 2026.

The Company has implemented and continues to assess a companywide cost and expense reduction initiative to improve its’ EBITDA.

The Company intends to refinance the Delayed Draw Term Loans on a long-term basis, repay the outstanding balance using cash flow from operations, or obtain additional investments.

Despite net losses, management continues to actively manage liquidity through close monitoring of working capital and disciplined cash management practices.

These efforts include extending payment terms with vendor partners, enhancing collection efforts to accelerate cash inflows, and maintaining a focus on expense control.

As a result of these actions, the Company has reduced its cash burn during the period.

Additionally, regarding the $10.0 million in Delayed Draw Term Loans due July 2026, the Company intends to refinance on a long term basis, pay down using cash flow from operations, or receive additional investments.

As part of its business strategy, the Company continually evaluates potential acquisitions of businesses it believes hold promise for long-term appreciation and that can leverage our strengths.

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Accordingly, substantial doubt about the Company’s ability to continue as a going concern remains.

Subsequent to year-end, the Company entered into amendments to its First Lien Credit Agreement and Second Lien Credit Agreement that waived certain covenant requirements.

As of March 31, 2026, the Company was in compliance with all applicable financial covenants.

Subsequent to June 30, 2026, the Company entered into amendments to its First Lien Credit Agreement and received a limited waiver related to its failure to satisfy the Audio Adjusted EBITDA covenant for the quarter ended June 30, 2026.

As a result of the Company’s failure to satisfy the Audio Adjusted EBITDA covenant, $63.3 million of outstanding long-term debt was classified as current as of June 30, 2026, increasing the Company’s near-term debt obligations and liquidity requirements.

Future liquidity and capital requirements will depend on a number of factors, including operating performance, macroeconomic conditions, changes in working capital, and the timing and extent of discretionary investments.

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Operating Activities

Cash flows used in operating activities were $2.0 million for the three months ended March 31, 2026, compared to cash flows provided by operating activities of $2.1 million for the three months ended March 31, 2025 .

The decline in operating cash flow was primarily driven by a higher net loss and unfavorable changes in working capital, including decreases in deferred revenue and other liabilities and smaller increases in accounts payable, partially offset by improved collections on accounts receivable.

Cash flows used in operating activities were $2.8 million for the six months ended June 30, 2026, compared to cash flows used in operating activities of $0.9 million for the six months ended June 30, 2025 .

The decline in operating cash flow was primarily driven by a higher net loss and unfavorable changes in working capital, including decreases in other liabilities.

Investing Activities

Cash flows provided by investing activities were $0.2 million for the three months ended March 31, 2026, primarily attributable to the proceeds from the sale of land.

Cash flows used in investing activities were $0.1 million for the three months ended March 31, 2025, primarily attributable to the purchases of equipment.

Cash flows used in investing activities were $0.3 million for the six months ended June 30, 2026, primarily attributable to the investment in the equity method investment and purchases of property and equipment, partially offset by the proceeds from the sale of land.

Cash flows used in investing activities were $0.3 million for the six months ended June 30, 2025, attributable to the purchases of property and equipment.

Financing Activities

Cash flows used in financing activities were $0.1 million for the three months ended March 31, 2026, attributable to finance lease principal payments.

Cash flows provided by financing activities were $0.2 million for the three months ended March 31, 2025, attributable to finance lease principal payments and settlement of tax withholding obligations.

Cash flows used in financing activities were $0.3 million for the six months ended June 30, 2026, attributable to finance lease principal payments.

Cash flows used in financing activities were $0.3 million for the six months ended June 30, 2025, attributable to finance lease principal payments and settlement of tax withholding obligations.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis